Valuation of Takeover Targets and Auditor Quality
DBW Die Betriebswirtschaft - Business Administration Review (BARev), 2013, Forthcoming
44 Pages Posted: 22 Aug 2013
Date Written: December 12, 2012
Abstract
This study investigates whether the market’s perception of auditor quality makes a difference to the market value of a firm using a sample of 1 915 takeover offers in the USA over the period 1990 to 2005. The study finds, as hypothesised, that the takeover process makes a smaller correction to the market price of the target when it has a Big 4 auditor suggesting that less private information becomes available. We find no empirical evidence for the auditor switch effect, which is an alternative explanation for the lower CARs for Big 4 targets.
Keywords: Audit quality, valuation, takeovers
JEL Classification: G34, M41, M42
Suggested Citation: Suggested Citation
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